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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I have a tax law question. I got divorced last November, and

Customer Question

I have a tax law question. I got divorced last November, and on my divorce decree, the child support is written as an "unallocated alimony and child support". I did not fully understand the concept of it, but I was just told that I need to report the full amount to the IRS on the tax return. Recently, a CPA told me that I should not have to report anything to the IRS since the "unallocated alimony and child support", as written in the decree, would be considered by the IRS to be a child support and not alimony. I wanted an opinion from a legal point of view. I do have the copy of the decree with me, and the tax-applicable part of the alimony and child support is about 2 pages long with about 300-400words. If needed, I can either fax or type the part to show you exactly what it says on the decree. If anyone can help me, I would really appreciate it. Thank you.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

I agree with the CPA that based on the information you provided payments are not considered as alimony from the IRS point of view and are not deducted by the payer and are not included into the income by the recipient.

 

In order to be treated as deductible alimony, payments made from you to your spouse (or ex-spouse) must meet all of the following requirements:

  • The payments must be in cash, check, or money order.
  • The payments must be received by or on behalf of your spouse under a divorce or separation document (including a final decree, a temporary court order, or a written separation agreement between the two of you). Payments you make to third parties on behalf of your spouse, such as for your spouse's medical expenses, housing costs, taxes, tuition, etc., can qualify.
  • You and your spouse must not opt out of alimony treatment by stating in the divorce decree that the payments aren't to be considered alimony for federal income tax purposes.
  • If you and your spouse have received a final decree of divorce or decree of separate maintenance, you may not be living in the same household when the payment is made. If the payment was made under temporary orders and the decree is not yet final, it is okay to be living in the same home.
  • The payer's obligation to make payments must end when the recipient dies, and there must be no liability to make any payment in cash or property as a substitute after the death.
  • You and your spouse may not file a joint tax return with each other for the year.
  • If any portion of the payment is considered by the IRS to be child support, that portion can't be treated as alimony.

See for reference the IRS publication 504 - http://www.irs.gov/pub/irs-pdf/p504.pdf

 

If any of these requirements are not clearly written in the divorce decree - payments are likely be classified as Property Settlements or Child Support.

 

Customer: replied 5 years ago.
Would it be possible for you to review the alimony and child support part of the decree? I want to make sure so that I can eliminate the possibility of any penalty on my part in the future.
Expert:  Lev replied 5 years ago.

I may take a look - there is no problem - but I may not give you with any guarantee this matter.

Any US federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer

(i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or

(ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

 

You likely need a local tax attorney or a CPA or an Enrolled Agent to review your divorce decree and provide you with written evaluation.

Please see in this article what types of written documents you may expect - http://www.clarktrev.com/pdf/IRS230.pdf

 

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22348
Experience: Taxes, Immigration, Labor Relations
Lev and 5 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

LEV,

 

I understand. I just want an opinion from as many experienced individuals as possible. I really do appreciate your help, and I will in no way hold anyone accountable for future penalty or misfortune that may come upon myself.

Here is the child support/alimony part of the decree:

 

ARTICLE III: UNALLOCATED ALIMONY AND CHILD SUPPORT

 

3.1 The Plaintiff(my ex-husband) shall pay to the Defendant(myself) the sum of $250.00 per week as unallocated alimony and child support as well as fifty-five (55%) percent of the minor children's unreimbursed medical, dental and work-related day care expenses which includes summer day camp. Unallocated alimony and support shall terminate upon the first of the following events: the death of the Plaintiff, the death of the Defendant, or July 1, 2024. Unallocated alimony and child support shall be modifiable in the event of the Defendant's remarriage, the Defendant's cohabitation as defined by statute, the Plaintiff's earning in excess of eighty thousand dollars ($80,000.00) per year, or the Defendant's earning in excess of thirty thousand dollars ($30,000.00) per year. The parties acknowledge that the Connecticut Child Support Guidelines mandate a child support payment based upon the current earnings of the parties in the amount of $265.00 per week. The parties acknowledge that the Connecticut Child Support Guidelines mandate an allocation for unreimbursed medical expense an qualified day care expense such that the Plaintiff would be responsible for fifty five (55%) percent and the Defendant would be responsible for forty five (45%) percent based upon the current earnings of the parties.

 

3.2 In the event of the termination of unallocated alimony and child support, the obligation to support the minor children individually shall terminate as provided in this Agreement, based upon the first of the following events:

a) attains the age of eighteen or if the child has not graduated from high school (and still attends high school) than child support shall continue until such time as the child graduates high school, but in no event shall such obligation for child support continue beyond nineteen (19) years of age for any child of the marriage;

b) The death of a child of the marriage;

c) The marriage of a child of this marriage;

d) The death of the Plaintiff,

Even if any or all events listed above occur, any child support arrearage shall be paid in full.

 

Thank you so much for reading this over. If you could give me an advice on this matter to the best of your knowledge, I would really appreciate it.

Customer: replied 5 years ago.

LEV,

 

Thank you so much for your help. I understand that you did not have time to go through my last message. I am guessing that you have gone to sleep since it is so late.

 

The advice you have given me up to this point has been a great help.

I did not want the time you have given me to go unpaid, so I am going to end this question at this point.

I greatly appreciate your help.

Thank you so much.

Expert:  Arthur Rubin replied 5 years ago.

We appreciate your acceptance of LEV's answer based on the material given before you uploaded the text of the agreeement.

 

I just wanted to concur; IRS regulations specify that "alimony" must end at remarriage, not just be renegotiated.

 

You do not need to Accept my answer; I'm just offering my supporting opinion.

Expert:  Lev replied 5 years ago.

The term "unallocated alimony and child support" is very tricky..

It is absolutely not clear what the amount is alimony and what is child support.

 

More over - there is a statement "the sum of $250.00 per week as unallocated alimony and child support" and "mandate a child support payment based upon the current earnings of the parties in the amount of $265.00 per week" - that tends me to believe that the amount of alimony is not included at all.

 

also that statement is critical for payment being considered as alimony - and I did not find it in your extract.

  • The payer's obligation to make payments must end when the recipient dies, and there must be no liability to make any payment in cash or property as a substitute after the death.
  • Means - if you die - payments will continue - so they are not alimony.

     

    Most likely your ex-spouse's attorney did not do a good job, because your ex-spouse would not be able to deduct any part of payments.

    Even if you are "on good terms" - you will not be able to "shift" some taxable income from him to you as alimony because of vague language in the divorce degree.

     

    I would take a side with your CPA - there is no alimony in this divorce degree and all payments should be considered as child support.

    If your ex-spouse will deduct any of his payments on his tax return and get audited - I suspect his deductions will be disallowed.

    The outcome if he decides to deduct - will be that he should report your name as a recipient - and the IRS will expect you to report that amount as an income - so you may expect the letter from the IRS - and might be involved in litigations...

    I suggest to communicate the issue to your ex-spouse to ensure he will not deduct any of payments.

     

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